A homeowner in Parkville, a suburb of Baltimore, opened her mail one day to find an unexpected check for $234,368.25 (£176,000) made out to her.
asserted
homeowner → open → her
Instead, it was a tactic used by a potential buyer who wanted to purchase her home without putting it on the open market.
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who → use → market
That practice is now banned across Maryland under a state law that took effect on 1 October.
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that → ban → October
The law targets an aggressive type of direct-mail marketing.
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law → target → marketing
It makes it illegal to send property owners negotiable financial instruments along with unsolicited offers to buy their homes.
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it → make → homes
The legislation, called Senate Bill 582, was signed into law by Maryland Governor Wes Moore in April.
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legislation → call → April
Anyone who violates the ban can face a misdemeanor charge and a fine of up to $500 (£375).
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who → violate → 500
Deceptive tactics targeting vulnerable owners
Direct-mail offers from real estate investors are common across North America.
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offers → target → America
Homeowners often receive postcards, letters, and phone calls offering quick, all-cash deals without real estate agent fees or the need to make home repairs.
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Homeowners → receive → repairs
However, consumer groups told Maryland lawmakers that sending an actual check can make the offer seem much more real to a homeowner.
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offer → tell → homeowner
During legislative hearings, Jennifer Bevan-Dangel, president and chief executive of the advocacy group Economic Action Maryland, described the checks as risky tools.
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Dangel → describe → tools
She said that even experienced advisers were surprised by them and were unsure about the real legal meaning of these unsolicited messages.
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advisers → say → messages
She called the approach deceptive at worst and misleading at best.
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She → call → approach
Representatives of the CASH Campaign of Maryland, a nonprofit group focused on financial security for low-income residents, also testified that these checks can look like an easy source of money for people facing financial trouble.
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checks → focus → trouble
The group warned that cashing or depositing the checks could quietly bind people to contracts they do not fully understand.
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they → warn → contracts
The strategy is based on live check financing, a direct-mail lending method that became widely used during the 1990s.
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that → base → 1990s
Banks and other financial companies mailed active loan checks to consumers who had not applied for them.
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who → mail → them
By depositing the money, recipients agreed to the loan terms, including interest rates and service fees.
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recipients → deposit → rates
A 1998 investigation by the US Government Accountability Office showed how large the practice had become.
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practice → show → Office
The report said Fleet Bank mailed 50,000 live checks during a limited trial in 1995.
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Bank → say → 1995
By March 1998, the bank had sent 5.85 million checks, resulting in about 155,000 individual loans worth $680 million (£510 million).
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bank → send → loans
The fast growth of the practice also created major security risks.
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growth → create → risks
Fleet Bank recorded 68 confirmed cases of fraud involving intercepted checks.
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Bank → record → checks
Another lender, First Chicago, stopped its live check program completely after suffering financial losses it could not sustain.
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it → stop → losses
States began placing limits on the practice around the same time.
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States → begin → time
Minnesota introduced rules in 1998 that restricted live check mailings unless the recipient had specifically asked for them.
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recipient → introduce → them
North Carolina required clear disclosures in 2001.
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Carolina → require → 2001
Despite those measures, the practice later returned.
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practice → return → measures
The Consumer Financial Protection Bureau responded by issuing updated guidance after direct-mail loan offers increased.
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offers → respond → guidance
Legal safeguards and official guidance
Under the updated Maryland law, a homeowner does not automatically enter into a legal agreement just because an unsolicited check arrives in the mail.
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check → update → mail
Legal responsibility applies only if the recipient signs and negotiates the financial instrument.
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recipient → apply → instrument
State regulators are telling residents who receive unexpected financial offers by mail not to sign, endorse, or deposit them.
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who → tell → them
The Maryland Office of Financial Regulation is asking residents to report suspicious documents directly to officials so they can be investigated.
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they → ask → officials
The law also contains specific exceptions.
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law → contain → exceptions
Financial institutions can still send convenience checks connected to existing lines of credit.
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institutions → send → credit
Prescreened offers for unsecured credit that are regulated under federal law are also not covered by the ban.
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that → regulate → ban
The Aporia
